Whenever we go for sap implementation of any industry, its paramount importance lies in setting the design for the key Master Data in proper & appropriate way as it is the core data of an enterprise that we need to create irrespective of any business transactions that the organization will follow. It not only helps for the smooth execution of business processes but also for well-informed business decisions through the required reporting.


In case of Oil & Gas especially Upstream, properly defined and captured data will result in accurate results and a consistent picture of the truth for business operators and managers. 


It’s not only important from the data quality & consistency perspective but also equally important to think appropriately from the data dimension perspective.



Now the immediate question comes to our mind: Do we need to think about Data Dimension here?


We got to think about functional categories of cost tracking if we want to think about data dimension.

Every upstream company wants to ensure that all functional categories of cost tracking are properly captured.

And this is most important reason why Global Chart of Accounts should be leveraged to provide the capability to have costs tracked to an adequate level of detail.



How to identify the Dimension:


Organization generally use the cost center to identify the dimension.  Most of the times Cost centers are defined down to the well level.



From the cost capture standpoint:


  • Maintenance cost and critical types of operating cost (i.e. Fuel, Electricity, compression etc.) are captured at well level.
  • It’s a leading practice to capture labor cost at property level and subsequently allocated based on well count.


Let’s see what are the key Master Data:


  • Joint Venture (JVA Module)
  • GL Account/Cost Element (FI/CO Module)
  • Secondary Cost Element (CO Module)
  • Cost Center (CO Module)
  • Profit Center (FI/CO Module)
  • Internal Order (CO Module)
  • Project/WBS Element (PS Module)
  • Functional Area (FI Module)
  • Functional Location (PM Module)
  • PM Order (PM Module)
  • MM Module (PO) etc.


Its time to note why these Master Data are used and what does it represent:


Joint Venture: We all know a joint venture partnership consists of an operating partner (operator) and one or more non-operating partners who combine monetary or personnel resources to share a project’s expenses and revenues. So it defines joint ownership associated with all operational aspects attributable to that ownership. This is typically defined at the lease level.

GL Account/Cost Element: This basically captures what the costs were spent on (services, materials, labor, utilities, etc.) other than Revenue, Asset & Liabilities accounts that are required for the execution of respective business transactions.

Secondary Cost Element: Secondary cost elements are needed in order to execute internal settlement, allocation of overhead costs, JV Assessment, Distribution, CO Assessment/Distribution & Internal activity allocation so most common secondary cost element categories used are: 21, 41, 42 & 43.

Cost Center: Cost center is always unique to the ownership defined by the Joint Venture. This can either be defined at the JV level or at lower level as needed. As it is possible to set up the JV at many different levels like field, group of wells, well bore, well completion etc. so it is appropriate to have the minimum level of details required.


Profit Center: Many organizations aspire to have balance sheet at the profit center level and profit center can represent Gas Plant, Pipeline, field etc. A profit center group can represent an asset. A profit center hierarchy can also be composed of different levels like total, region, country, asset, field etc.


Internal Order: This can be created as a cost object at a lower level than cost center i.e. each cost center could have standing internal orders for normal operations, compression etc.


Project/WBS Element: These are used to capture capital costs or expense projects. This is basically used in order to establish hierarchical structure of cost objects to capture AFE approval projects.


Functional Area: Functional Area defines the functional purpose or activity related to the costs. Many organization also use the functional area to represent SEC’s  P & L categories. All cost objects are linked to the functional area. Functional area can be determined for the various cost objects based on the related configurations i.e.


    • WBS – based on Project Type
    • Work Order – based on Work Order Type
    • Cost Center – based on Cost Center Category

Functional Location: It is possible that equipment is located in a particular place however identification of that place is required so that it’s possible to locate the equipment and functional location actually helps for that and its part of the Plant Maintenance module. This is a local hierarchy for operational organization and evaluation of maintenance.

Plant Maintenance Order: This is a cost object attached to specific equipment or functional locations where costs associated with specific maintenance events are initially captured.

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